In this section, I will share five keys to help you become a successful trader.
Key 1: Have your own trading strategy
Having your own trading strategy is the foundation of being a successful trader. Your trading strategy should have been researched and tested on your own, and you are very familiar with it.
One mistake that many novice traders make is that they will see someone else's trading strategy online or on YouTube and use it directly. They don't do any research or testing and take someone else's strategy as their own. This is a very dangerous practice.
A good trading strategy should include the following elements:
Trading direction: Are you long or short?
Trading Time Frame: Are you trading in the **, medium or long term?
Entry point: At what price do you enter?
Stop Loss Point: At what price do you stop your loss?
Take Profit Point: At what price do you take profit?
For example, I use the trend ** order strategy:
Finding a strategy that fits your trading style and determining whether a strategy can be profitable requires a lot of review and testing and correction before you can build your trading system. There are many strategic ideas in this column for reference and optimization
Find the support level with a high probability of ** (long for example).
Enter the market after the long white candle appears, and set the stop loss at the previous low. This is my usual entry strategy.
Key 2: Control the risk of trading
Controlling your trading risks is an important factor in becoming a successful trader. Even if your trading strategy is very good, you can still fail if you can't control your risk well.
The key to controlling risk is that you should set a stop loss and exit the trade when you lose a certain amount. The stop loss should be set within the range allowed by your trading strategy.
Take Xiao Ming and Xiao Hua both use a 50% profit and loss ratio of 2 to 1 trading strategy as an example, as shown in the figure below, if you don't control your funds well, you can liquidate your position after making two orders.
Key 3: Make consistent trading decisions
During the trading process, you may encounter some uncertain situations. At this point, you need to make a decision whether to continue trading or exit the trade. The trading consistency decision is to always adhere to your trading strategy, make orders when the conditions are reached, and do not give up every trading opportunity, so as to ensure overall profit, rather than giving up the original planned trading system because of a few small stop losses, which will eventually lead to overall losses!
If you can't make consistent trading decisions, you'll have a hard time succeeding. You may make bad decisions because of mood swings.
Therefore, you need to make a trading plan before trading and strictly follow this plan.
Key 4: Always keep the momentum going
In the process of trading, you may encounter some setbacks. At this point, you need to keep the momentum going.
Many traders give up trading after a setback. But if you want to be a successful trader, you must learn to learn from your failures and keep trying.
Key five: Overcome greed and impatience
Greed and impatience are two of the biggest factors that hinder trading success.
Greed and impatience are two of the biggest factors that hinder a trader's success. Greed will make you trade with a gambling mindset, while impatience will make you impatient and unable to make the right trading decisions. Therefore, eliminating greed and impatience is an important topic for becoming a consistently profitable trader.
Greed
Greed is the most common psychological obstacle for traders. Greed can make you make bad decisions in trading, such as:
Excessive overweighting, resulting in widening losses.
Chase the rise and kill the fall, and operate against the trend.
Hold a losing position and look forward to ***
Impatient
Impatience can make you make impulsive decisions in trading, such as:
Enter the market when there is no clear trading signal.
Play when you don't reach your intended goal.
Rushing to stop losses when losing money leads to widening losses.
How to eliminate greed and impatience
To eliminate greed and impatience, you need to start with the following aspects:
Establish reasonable trading goals
Reasonable trading goals can help you control your risk and avoid excessive greed. For example, if your goal is to make a profit of 10% per month, then you won't be chasing profits too much when trading.
Set strict trading rules
Strict trading rules can help you avoid impulsive trading behavior. For example, you can set up a stop-loss rule to stop losses as soon as it falls below a certain level.
Develop good trading habits
Good trading habits can help you stay calm and rational. For example, it is necessary to be well prepared before trading, and strictly follow the trading rules during the trading process.
Think of profit and loss as a percentage
Looking at profit and loss as a percentage, rather than a specific amount, can help you reduce greed and impatience. For example, if you make a 10% profit on a trade, then your profit margin is the same whether you make a profit of $100 or $10,000. This way, you won't feel greedy because of the amount of money you make and you won't feel impatient because of the amount you lose.
All in all, eliminating greed and impatience is a long-term process that requires constant learning and practice by traders.
Summary
If you can master these five keys, you will be successful on the road to trading.
Here are some additional tips that can help you become a successful trader:
Learn and master technical analysis. Technical analysis can help you identify trends and entry points.
Conduct demo trading. Paper trading allows you to test your trading strategies without risk.
Find a good community of traders. A good community of traders allows you to exchange experiences with other traders and learn new things.
Good luck on your trading path!